The International Dairy Foods Association commended members of Congress for approving an omnibus appropriations bill last night that amends Section 199A of the Tax Cuts and Jobs Act to resolve unintended consequences that threatened to distort the dairy marketplace. The amended language levels the playing field for IDFA’s cooperative and non-cooperative members that produce milk and dairy products.
“IDFA applauds the members of Congress who demonstrated that they care about the state of the U.S. agricultural economy and worked tirelessly to find a solution that allows farmers to sell their agricultural products to their buyers of choice without being unduly influenced by tax code considerations,” said Michael Dykes, D.V.M., IDFA president and CEO.
“We commend the many members of Congress who supported the fix to Section 199A, especially House Ways and Means Chairman Kevin Brady (R-TX), Senate Finance Chairman Orrin Hatch (R-UT), Senator John Hoeven (R-ND), Senator John Thune (R-SD), Senate Agriculture Chairman Pat Roberts (R-KS) and House Agriculture Chairman Mike Conaway (R-TX),” said Dave Carlin, IDFA senior vice president of legislative affairs and economic policy. “The solution is good for all of agriculture and restores a competitive marketplace for all buyers and sellers.”
Level Playing Field for Dairy
Prior to passage of the Tax Cuts and Jobs Act last December, a tax provision called Section 199 provided businesses, including farmers and agricultural cooperatives, with a deduction based on the business income from domestic production activities. The new tax law significantly altered the tax code and Section 199 along with it. A new Section 199A was included in the Tax Cuts and Jobs Act to continue providing this type of benefit to cooperatives and their members, but the provision created an imbalance in the agriculture marketplace, including the marketplace for milk and dairy products.
The modified Section 199A proposal allows cooperatives to determine their deductions based on rules similar to those under the former Section 199. Farmers selling their agricultural products to independent buyers will continue to determine their deductions according to the current law in Section 199A, and farmers selling their agricultural products to their agricultural cooperatives will be able to claim deductions on agricultural products sold to their cooperatives. They also will receive a pass-through deduction from their cooperatives, although the deductions will be limited to ensure a competitive balance in the agricultural marketplace.
The International Dairy Foods Association (IDFA), Washington, D.C., represents the nation’s dairy manufacturing and marketing industry, which supports nearly 3 million jobs, generates more than $39 billion in direct wages and has an overall economic impact of more than $200 billion. IDFA is the umbrella organization for the Milk Industry Foundation (MIF), the National Cheese Institute (NCI) and the International Ice Cream Association (IICA).
Our members range from large multinational organizations to single-plant companies. Together they represent more than 85 percent of the milk, cultured products, cheese, ice cream and frozen desserts produced and marketed in the United States and sold throughout the world. Our diverse membership includes numerous food retailers, suppliers and companies that offer infant formula and a wide variety of milk-derived ingredients. IDFA can be found at www.idfa.org.